Second-richest citizen and real estate magnate Manuel Villar has aspirations to construct one million new homes and grow his media business into the equivalent of Disney in the Philippines.

Introduction

Businessman and politician Manuel Villar lost his election quest for president twelve years ago after receiving only 15% of the vote. He didn't let that setback stop him, though. He put himself back into his profession and expanded his primary industry, real estate development. With a fortune of $7.8 billion, he is still ranked No. 2 among the Philippines' 50 richest people as of 2018, thanks to share price increases for his publicly traded enterprises.

Even though one of his career's major deals—the June listing of his first real estate trust on the Philippine exchange—delivered a lackluster performance, he was still able to reach that position. The VistaREIT, which included office buildings and shopping centers worth 36 billion pesos ($639 million) from Villar's flagship Vista Land & Lifescapes, was intended to fund 9.15 billion pesos, but only managed to raise 4.8 billion pesos.

A 30% price reduction and a 25% reduction in the number of shares were made due to worsening market conditions. The start of trading on June 15 coincided with the U.S. Federal Reserve's 75 basis point increase in interest rates, adding to the pressures of rising global inflation and the unpredictability of geopolitics brought on by the conflict in Ukraine. Shares of VistaREIT closed out the trading day at their 1.75 peso listing price, and since then, they have remained unchanged.

Villar accepts the IPO's downsizing and has no remorse about moving forward despite the bad circumstances. The chairman of Vista Land claims that it is difficult to forecast when market attitude would change. He says, "Now that we have a listed REIT [into which] we can infuse more assets], we're focusing on what we can accomplish in the future with our new vehicle.

Villar, who owns six publicly traded companies, including two in the retail industry, has long relied on property as a pillar of his business and as a means of accumulating money. (His entire fortune in 2019 was $6.6 billion.) Golden MV Holdings (formerly Golden Bria Holdings), a developer of housing and memorial parks, has had the highest gain in value since its 2016 market debut.

Aiming to continue growing, the 72-year-old. His expansive real estate and retail conglomerate, which already includes the fast food chains Chicken Deli and Coffee Project, will soon gain a casino, a TV network, a theme park, and a toll road. Villar declares, "I'll pass away in boots." He is seated in a Coffee Project establishment in the heart of Manila, which he founded eight years ago in an effort to outdo the multinational coffee company Starbucks. Among other IPOs, he hopes to list Coffee Project by the end of the year to help fund a 65% increase in the number of its branches to 200. Another IPO he hopes to list is for a power plant on the island of Siquijor, which is controlled by a private holding company of his.

Background

The entrepreneur has straightforward origins. He had a fishmonger for a mother and a government worker for a father. Villar spent his formative years in a rental flat less than 4 kilometers from Manila's infamous Smokey Mountain waste dump. I became a harder person because of growing up in a busy environment and helping my mom sell fish at the local market, he claims. I used to be quite bashful when I was little. I had to get past that to be successful. I learned survival skills from that.

He claims that his first business, a seafood delivery service, failed because a Makati restaurant he supplied betrayed him. However, Villar devised a discounted meal-ticket system for customers that eventually allowed him to make up his losses. He later joined a World Bank division supporting small enterprises, left it, and in 1975 borrowed 10,000 pesos from it to launch a new business. Today, the loan is worth roughly 350,000 pesos. He acquired two reconditioned trucks, which he used to distribute sand and gravel to real estate developers. He started working in real estate in 1977, specializing on affordable housing after learning the ropes from clients. His enterprises have so far constructed more than 500,000 dwellings.

Villar's success in real estate wasn't straightforward. His company was almost completely destroyed by the Asian financial crisis in 1999 when C&P Homes, his only publicly traded business unit at the time, missed payments on 16 billion pesos in loans from domestic and foreign creditors obtained for expansion. C&P Homes gave up certain properties to pay back creditors after a restructuring that took over ten years to finish. One of them was the Bank of Philippine Islands, whose sibling business Ayala Property eventually came to buy and develop a portion of Villar's enormous tracts of land in the province of Cavite, south of Manila. In 2007, Vista Land bought C&P Homes after Villar contributed assets.

Villar concentrated on extending Vista Land beyond residential developments after quitting politics in the wake of the 2010 presidential loss. In 2012, he bought the chain of indebted Starmalls shopping centers from his in-laws. Three years later, he injected the assets into Vista Land and rebranded it to Vista Malls. The group's rental income increased 30% to 2.6 billion pesos in the first quarter from a year ago and will increase 29% to 9.3 billion pesos in 2021 thanks to the group's current portfolio of 31 malls, 69 commercial centers, and seven office buildings with a combined gross floor area of 1.6 million square meters.

Property in the Philippines has a poor prognosis in the near future. Since "rising borrowing rates and a weak peso will further weigh on an already over-supplied residential market," according to Kum Soek Ching, head of Southeast Asia research at Credit Suisse Private Banking in Singapore. However, according to Miguel Sevidal, an analyst at Maybank Philippines, the industry is expecting that repressed demand, especially from Filipinos living abroad, would continue to support growth.

According to Brian Edang, the chief financial officer of Vista Land, Villar's REIT enables the company to raise funds and lessen its reliance on borrowings at a time when interest rates are rising. Ten shopping centers and two office buildings totaling 256,404 square metres in gross floor space were injected into VistaREIT by the developer, accounting for 16% of Vista Land's total investment portfolio. "VistaREIT seems OK. It has fair pricing. The yield can be increased by [Villar] adding a lot more properties, according to Joey Roxas, president of Philippine brokerage Eagle Equities.